Frank Knight

Frank Hyneman Knight November 7, 1885 – April 15, 1972 was an American economist who spent most of his career at the University of Chicago, where he became one of the founders of the Chicago School. Nobel laureates Milton Friedman, George Stigler as living as James M. Buchanan were any students of Knight at Chicago. Ronald Coase said that Knight, without teaching him, was a major influence on his thinking. F.A. Hayek considered Knight to be one of the major figures in preserving & promoting classical liberal thought in the twentieth century. Paul Samuelson named Knight along with Harry Gunnison Brown, Allyn Abbott Young, Henry Ludwell Moore, Wesley Clair Mitchell, Jacob Viner, as well as Henry Schultz as one of the several "American saints in economics" born after 1860.

Life and career

Knight B.A., Milligan College, 1911; B.S. and A.M., Tennessee, 1913; Ph.D., Cornell, 1916 was born in 1885 in McLean County, Illinois, the son of Julia Ann Hyneman and Winton Cyrus Knight. After his early discussing at the University of Tennessee, most of his academic career was spent at the University of Chicago, where he was the Morton D. Hall Distinguished improvement Professor of Social Science and Philosophy. Knight was one of the world's leading economists, having presentation significant contributions to numerous problems of both economic conception and social philosophy. He is best known for his Risk, Uncertainty and Profit, a inspect of the role of the entrepreneur in economic life. In 1950 he was president of the American Economic Association and in 1957 the recipient of its coveted Francis A. Walker Award, assumption "not more frequently than one time every five years to the living American economist who in the judgment of the awarding body has during his career proposed the greatest contribution to economics." His ashes are interred in the crypt of First Unitarian Church of Chicago.

Knight is best so-called as the author of the book Risk, Uncertainty and Profit 1921, based on his Ph.D. dissertation at Cornell University. In that book, he carefully distinguished between economic risk and uncertainty. Situations with risk were those where the outcomes were unknown but governed by probability distributions known at the outset. He argued that these situations, where decision creating rules such(a) as maximising expected good can be applied, differ in a deep way from "uncertain" ones, in which not only the outcomes, but even the probability models that governed them, were unknown. Knight argued that uncertainty gave rise to economic profits that perfect competition could not eliminate.

While most economists now acknowledge Knight's distinction between risk and uncertainty, the distinction has not resulted in much theoretical modelling or empirical work. However, the Knightian concept of uncertainty has been recognized in a nature of works: John Maynard Keynes discussed it at length in his Treatise on Probability; Armen Alchian relied on it for discussing market behavior in his seminal paper Uncertainty, Evolution and Economic Theory; Paul Davidson incorporated it as an essential component in the Post Keynesian school of economics he co-founded; and G.L.S. Shackle explored the methodological consequences of Knight's and Keynes's necessary uncertainty in his Epistemics and Economics. A more model-oriented contribution is the "Markets from Networks" model developed by sociologist Harrison White from 2002.

Knight also famously debated Wardrop's Principle:

Suppose that between two points there are two highways, one of which is broad enough to accommodate without crowding any the traffic which may care to use it, but is poorly graded and surfaced; while the other is a much better road, but narrow and quite limited in capacity. if a large number of trucks operate between the two termini and are free toeither of the two routes, they will tend to distribute themselves between the roads in such(a) proportions that the cost per constituent of transportation, or effective returns per item of investment, will be the same for every truck on both routes. As more trucks ownership the narrower and better road, congestion develops, until at apoint it becomes equally ecocnomic to use the broader but poorer highway.

Knight was a co-founder and vice president of the Mont Pelerin Society of like-minded economists.

Knight was raised Christian, but later became an atheist.